Russell Wasendorf Sr. is the CEO of Peregrine Financial Group, a major futures trading company. He recently confessed in a suicide note that he embezzled millions from clients for nearly 20 years. His suicide attempt was prevented by Cedar Falls police, who noticed his car had a hose running from its tailpipe to the interior.

While in the hospital, Wasendorf was arrested and charged with lying to regulators. He will likely face additional charges with the potential of a long prison sentence.

Wasendorf's confession/suicide note was released by federal authorities and has been published in multiple newspapers. It gives valuable insight into what drives a wealthy person to crime. Here are some highlights:

"I was forced into a difficult decision: Should I go out of business or cheat?"

"I guess my ego was too big to admit failure. So I cheated."

"With careful concealment and blunt authority I was able to hide my fraud from others."

"If anyone questioned my authority I would simply point out that I was the sole shareholder."

We can all relate to the temptation to cheat when the chips are down. But few of us can relate to the pressure of thousands of people looking to you for help. Additionally, few of us work in an industry that worships greed. When combined, no wonder so many crimes are committed by executives in the financial services industry!

We miss the lesson of this crime if we only blame Wasendorf. Yes, he failed to follow regulations, and should have been arrested and forced out of business decades ago. But what is really going on? What is the bigger picture?

The overall problem is greed, especially in the financial services sector. We must ask ourselves: what value is being added by the financial services industry? Occasionally they help new companies raise money. They give us a safe place to store our money, and they make it easier to buy and sell things. But what value is provided by short-selling, futures, options, derivatives, or program trading?

While most financial transactions are complicated, they can all be subjected to a simple value-to-society test: Will the world be a better place afterwards? With most financial transactions, someone benefits from another person's misery. So, most financial transactions do not pass the value-to-society test.

In an industry driven by greed, the issue of value added to society never rises to the surface. Instead, it is ignored in the quest to make a buck at someone else's expense. This is why we need to redesign the entire financial services industry. We need to eliminate all transactions that basically rely on someone winning at someone else's expense.

The other problem underlying the Wasendorf case is accountability: most CEOs are not held sufficiently accountable to society. So, they let greed guide their decisions, and everyone else suffers. This is an easy explanation for how CEO compensation has continued to climb into the stratosphere while everyone else's pay declines. This is why we need to redesign corporate law so that CEOs are once again held accountable to society.

For details on how to reform the financial services industry and make CEOs more accountable to society, read Deep Economics, Part 5.